To the editor:
As president, Donald Trump signed two spending bills, the CARES Act and the Consolidated Appropriations Act (the latter being one of the largest spending bills ever enacted, surpassing the CARES Act), with a combined price tag of $4.5 trillion, including $3.1 trillion for COVID relief. In March 2021, Joe Biden signed the $1.9 trillion American Rescue Plan for further relief, bringing the total COVID relief spending to over $5 trillion.
If the conclusion reached from these programs is that they were the cause of recent year-over-year inflation, that would be wrong. And blaming the inflation on Biden is the other big lie.
The truth is more complicated. Beginning April 2021, year-over-year CPI-based inflation rose to a level not seen since September 2008. From there, the year-over-year inflation rate climbed to a peak of 9.1 percent before decreasing to 2.5 percent currently, lower than it was in March 2021.
With common sense and a little research, one can see that two well-known events were the primary sources of inflation: the onset of the COVID-19 pandemic in early 2020 and Russia’s invasion of Ukraine in February 2022. According to a Federal Reserve Bank of San Franciso study, COVID-related supply-chain shocks contributed as much as 60 percent to above-trend-line inflation from April 2021 to March 2023. Russia’s invasion exacerbated the inflation picture by impacting not only the price of energy but also food and supply-chain disruptions.
In addition to these causes, we had the Avian bird flu epidemic, causing the loss of 90 million chickens and rising egg prices; extreme weather, including drought causing increases in beef and flour prices; wage increases above inflation; and the Colonial Pipeline cyberattack in May 2021. According to a Yale report, extreme weather was the main disrupter of food prices in 2023.
Finally, one more source of inflation needs to be acknowledged: price increases above inflation. While price gouging can be hard to prove (except maybe at gas stations during a hurricane), it is instructive to know that non-financial corporate after-tax profits between 2019 and 2023 increased by about 91 percent while CPI-based inflation increased about 20 percent.
I hope this analysis will help those who would like to fault Trump or Biden/Harris for recent inflation to think again. Meanwhile, consider the counterfactual argument: What would have happened had neither president signed COVID-19 relief legislation? The answer is indisputable: a deep and lasting recession.
Edward Lane
Stockbridge
Click here to read The Berkshire Edge’s policy for submitting Letters to the Editor.
